February 20, 2012

Focus on donors can help build community

Donors are changing, and community foundations are adapting their business model to try to keep up with donors’ needs.

What is emerging may be a greater focus on building a more engaged community of donors by providing strategic advice on giving, and on social and global needs, and by connecting donors with charities and other donors who care about the same causes.

That is the view of Ellen Remmer, president and CEO of The Philanthropic Initiative, a nonprofit consulting firm that advises donors and on Jan. 1 merged with The Boston Foundation.

The foundation, which was founded in 1915, has $850 million in assets and has made over $1 billion in grants, including nearly $78 million in 2011, when it also received $81 million in gifts, while The Philanthropic Initiative, which was formed in 1989, has advised corporate, foundation and individual clients on giving away roughly $1 billion.

The merger creates a new, hybrid model for community foundations that can help ease a natural tension The Philanthropic Initiative identified in the old model in a study 10 years ago, Remmer says.

That study, which focused on donor education and learning, recommended that community foundations be strengthened so they could serve as more effective educators of donors.

Because their traditional business model relies on fees from donor funds under management, Remmer says, community foundations tend to focus on generating new funds, leaving them less time to devote to donors.

“The tension is, they’re always trying to get money under management,” she says.

But with their needs changing and growing, she says, donors need a lot of hands-on attention, as well.

Donors, for example, have a growing number of choices, and thus a growing number of questions, about what to support and how to give and get involved.

Family giving increasingly needs to accommodate not only an older generation that traditionally has focused on institutions like hospitals or museums, but also a younger generation that tends to focus on specific issues like homelessness.

And while they all live in local communities, donors increasingly care about global issues as well.

So community foundations should be providing training and resources for donors, particularly families, as well as hands-on consulting that helps them clarify their values and interests, define their mission, and craft a vision about what they want to accomplish, Remmer says.

Some donors also may want to operate their own foundations or manage the investment of their philanthropic assets, she says.

So while they traditionally have played those roles, she says, community foundations should be thinking about ways to accommodate those donors while still providing the advice donors need about their giving, a role that consultants like The Philanthropic Initiative can play.

A growing number of donors also want to have a big impact with their giving, and recognize they may need to collaborate with other donors, so in addition to giving money away, they find themselves playing a fundraising role, Remmer says.

In the wake of the earthquake in Haiti in 2010, for example, a Boston couple created a $1 million challenge fund at The Boston Foundation that generated another $1.5 million from other local donors.

In addition to just raising money, the effort engaged Boston-area donors who are part of a Haitian diaspora, and helped the foundation connect with them.

Throughout the U.S., Remmer says, community foundations are looking for ways to bring donors together so they can learn from one another and work together.

So focusing on the needs of donors can help a community foundation play a leadership role in building community.

“To be a leader, you need others to be with you,” Remmer says. “It’s all about having the potential for more influence, and having those relationships.”